Reliance Jio’s delay in 4G launch may foil its 'poaching' plan and give rivals first mover advantage

There is increasing speculation that Mukesh Ambani-owned Jio which expected to launch its 4G services around December 2015 will delay it further to the next fiscal year starting April 2016. Vodafone and Idea would would have by then launched their 4G services. Airtel has already rolled out its high-speed broadband services across over 300 towns and is aggressively expanding further.

Brokerage Bank of America Merrill Lynch said: "A further delay in launching 4G services could make it difficult for Reliance Jio Infocomm to poach high-end subscribers from top incumbents Airtel, Idea Cellular and Vodafone India who will have a first mover advantage."

The brokerage firm, in a note dated October 30, said it expects all the big three telcos to have rolled out 4G selectively in key urban areas before March 2016.
It also expects their top-end (high-usage) consumers to migrate to 4G. But the top 5 per cent customers - who contribute 25 per cent to revenue - of the big 3 are likely to be sticky and unlikely to switch to Jio at a time when their existing operator will also be offering 4G services, it said. "We think that Jio would need to focus on offering a differentiated service as aggressive pricing alone would not be able to help it have a sustainable advantage," the note said.

Analysts at BoFA-ML are also of the view that service launches matched by a sharp fall in prices of handsets supporting 4G is likely to boost adoption of the technology. even at the cost of 3G. "In the next few years, we expect to see limited differentiation between 3G and 4G - tariffs and smartphone prices," the report says.

As a result there would be limited value for consumer to be on a 3G network when compared to 4G, which offers far higher average speed compared with 3G. "We hence expect a faster acceleration towards 4G and see a large proportion of 2G subs leapfrogging 3G and moving to 4G," the brokerage firm added.
(Image credits: BCCL)